Stock, commodity exchanges join the 'great leap east'
Talk about Pudong today and one is less likely than before to hear remarks dismissing it as no more than a bottomless pit for investment.
This has little to do with the property glut - which remains a headache for developers - but more with official arm-twisting requiring financial institutions in the old city centre to relocate there.
The former piece of farmland to the east of the Huangpu River - hence its name Pudong - is being revamped into a modern metropolis to propel Shanghai into the financial ranks of Hong Kong, Singapore and Tokyo by the first decade of the next millennium.
Pudong is, however, not only Shanghai's bet on the future; it has received Beijing's blessing to become the growth engine for the Yangtze River delta region.
Conceived in 1990, the idea is to trigger rapid growth in the Pudong 'dragon head' so that it will filter down to the poorer, inner provinces such as Anhui, Sichuan and Jiangxi.
At the heart of the emerging sprawling town is Lujiazui Finance and Trade Zone, a 28-square-kilometre zone which will house the big names in Shanghai finance and banking in the next few years. The other three dedicated sites are the Jinqiao Export Processing Zone, Waigaoqiao Free Trade Zone, and Zhangjiang Hi-Tech Park.
If shares of the companies managing the four zones are any indication, investors are big on the Pudong story. Since the beginning of the year, prices of the shares have outperformed the market.
Of the four, Lujiazui appears to be the favourite. This is hardly surprising, as the financial zone is welcoming an unprecedented influx of tenants this year and next.
Indeed, while the other zones remain depressingly short of tenants, Lujiazui is seeing several foreign banks taking up residence there as a condition to carry out business in the local currency on a trial basis.
Hongkong Bank, Citibank, Bank of Tokyo-Mitsubishi, Standard Chartered Bank, Dai-ichi Kangyo Bank, Industrial Bank of Japan, Bank Indosuez, Sanwa Bank, and International Bank of Paris and Shanghai are required to move to Pudong as a prerequisite for doing yuan transactions.
Foreign banks which receive new branch licences are also encouraged to set up shop there. It is not just the great shift east by foreign banks which is lessening talk of Pudong being a white elephant.
The biggest financial institution to go east is the Shanghai Stock Exchange, which will move into its own building later this year.
Foreign property consultants say many Chinese and foreign brokerages, legal and accounting firms are likely to follow in the exchange's footsteps. US fund management company Templeton, for instance, has bought office space in the Shanghai Stock Exchange building to house its first representative office in China.
Joining the leap east are key commodity exchanges as well as major government investment and economic bodies.
But all these moves are merely the beginning. Analysts say it will need an even greater number of companies to relocate to Pudong before a critical mass develops.
This will probably come when travelling from Puxi to Pudong - currently an inconvenience to Shanghainese - is eased with the completion of a subway and a river-crossing passenger tunnel.
These two projects are among 10 major infrastructure programmes, costing 100 billion yuan (about HK$934 billion), being built under Pudong's Nine-year Plan, which ends in the year 2000.
The subway line, linking downtown Shanghai to Lujiazui in Pudong, should start running in 1999 - about the same time the first runway of the new Pudong airport becomes operational.